How Does PMAY Help to Reduce Home Loan ROI?

How Does PMAY Help to Reduce Home Loan ROI?

It’s no secret that real estate prices have skyrocketed in recent years. Hence, purchasing a home has become an expensive affair, and many people are forced to stay in rented apartments. However, the good news is that the Indian Government is taking proactive measures to help people realize their dream of purchasing their own house. In the same light, the Government launched the Pradhan Mantri Awas Yojana(PMAY) in the year 2015, under the ‘Housing for All’ initiative. As a part of the PMAY Credit Linked Subsidy Scheme (CLSS), individuals who are purchasing their first home and have availed a home loan are eligible for a subsidy on the interest payments on their loan.

This CLSS scheme aims at reducing the burden of home loan interest rate for individuals belonging to the Economical Weaker Section (EWS), Lower Income Group (LIG), and Middle Income Group (MIG). Let’s understand in detail how PMAY helps in reducing the home loan interest rate.

The table below denotes the Credit Linked Subsidy Scheme for EWS, LIG and MIG categories:

CLSS for LIG and EWS

Category Economically Weaker Section Lower Income Group
Annual income Rs 3 Lakhs Between Rs 3 Lakhs and Rs 6 Lakhs
Carpet area of house 30 Sq. Mtr. 60 Sq. Mtr.
Rate of interest subsidy 6.50% 6.50%
Maximum loan amount Rs 6 Lakhs Rs 6 Lakhs
Maximum loan tenure 20 years


Category Middle Income Group- 1 Middle Income Group-2
Annual income Between Rs 6 Lakhs and Rs 12 Lakhs Between Rs 12 Lakhs and Rs 18 Lakhs
Carpet area  of house 160 Sq. Mtr. 200 Sq. Mtr.
Rate of interest subsidy 4% 3%
Maximum loan amount Rs 9 Lakhs Rs 12 Lakhs
Maximum loan tenure 20 years

As most people end up availing home loan in India to purchase a property, the Pradhan Mantri Awas Yojana (PMAY) can prove to be a blessing for them. It can help reduce the burden of repaying a home loan significantly. Also, they will have to spend a lesser amount towards their home loan EMI payment. This will allow them to save on their monthly budget.

Eligibility for PMAY

It is to be noted that if you already have a house registered under your name or under the name of any family member, you won’t be eligible for the PMAY scheme. Furthermore, if any of your family members have already availed assistance from the Government under any housing scheme, thePMAY application will be rejected. Therefore, it is essential that you check your eligibility before claiming the PMAY subsidy, as you may have to face claim rejection if you don’t satisfy the eligibility criteria.

If you are looking to avail a home loan, make sure that you calculate your EMI beforehand with the help of an online home loan EMI calculator. This will help you get an estimate of the EMI you will have to pay towards the loan, thereby allowing you to plan your finances in a better

Nowadays, you can avail a home loan from prominent banks and financial institutions from the comfort of your home. All you have to do is visit the lender’s official website, fill in the home loan application form and upload the required documents. Post this, the lender representatives will get in touch with you, and once the details are verified, your home loan will be processed and sanctioned.

In case of any queries while availing a home loan, ensure that you seek the guidance of a financial advisor. . This can help you understand the nuances in a better way and prevent confusion or inconvenience at a later stage.

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